Former Righthaven CEO Secretly Hires Lawyers For The Company He No Longer Has Anything To Do With

from the that's-not-right dept

We'd pretty much thought that the Righthaven saga was over. After all, the company had gone into receivership back in December, and the court-appointed receiver had been auctioning off what little assets the company had in an attempt to satisfy all of the court-ordered attorneys' fees that Righthaven owed to the lawyers of some of the many defendants that Righthaven sued for copyright infringement on a repeatedly-rejected legal theory. At the same time, the CEO/founder of Righthaven, Steve Gibson had stopped showing up in court, had taken another job, and was being investigated by the Nevada State Bar.

As far as the court-appointed receiver, Lara Pearson, knew, Gibson and his wife Raisha "Drizzle" Gibson (who had been "COO" of Righthaven) no longer had anything to do with the company.

And then... she discovered that Gibson had somehow secured another law firm to supposedly represent "Righthaven" in its appeal of the Hoehn case (the first of the big losses that resulted in attorneys' fees being owed). That firm apparently tried to file some documents in the appeal six months late. This was quite a surprise, and Pearson reacted, as she should, by sending notices to both Gibsons, to the law firm that they employed and to the court explaining why this was ridiculous. In the letters, you can tell that Pearson is quite reasonably angry with the Gibsons, whom she reminds no longer have control over the firm, and makes it explicit to them that they were fired back in December. On top of that, she explains her intent to take legal action against the Gibsons for legal malpractice:

Your actions have caused, and continue to cause ongoing harm to Righthaven and its finances. To
put an end to this damage and prevent future harm, I hereby remove any and all authority for you to
act on behalf of the company, and formally place you on notice that the company will be taking legal
action against you for your ultra vires acts as well as for claims of legal malpractice, which led the
company to its current state.

.... Recently, it has come to my attention that you engaged the services of Miller Barondess LLP in Righthaven v. Hoehn.... I was neither informed of nor did I authorized this action, nor did I authorize any expenditure. Engaging yet another law firm and pursuing an appeal that both the Ninth Circuit and the District of Nevada have declined to find has a substantial likelihood of success is not in Righthaven's best interest...

Presently, Righthaven must satisfy more than $350,000 in judgments entered against it.... For you or anyone else acting on behalf of Righthaven to incur new fees or engage in any activity other than mitigating these liability is directly contrary to the company's best interests.

[....]
To be clear, you are fully terminated from any position with Righthaven LLC. You are prohibited from taking further action on its behalf, and may not hold yourself out as an officer, employee, or representative of the company. Any further actions you purport to take on Righthaven's behalf shall be met with requests for injunctive relief and personal sanctions...

The letter to the law firm that Gibson retained is equally direct:

Mr. Gibson does not and has not had authority to enter new contracts and incur new expenses for the company, which presently must satisfy more than $350,000 in judgments entered against it.

I was unaware that Mr. Gibson had retained your firm until Mr. Hoehn's counsel inquired about this development and whether I had approved it. Mr. Gibson has no authority to act on behalf of Righthaven -- and even if he did, the act of pursuing this appeal would add further costs onto Righthaven's already substantial debts -- which I would not have approved... I demand that you cease all billing activity immdiately. I also demand that you provide me with a full accounting of all funds in trust for Righthaven.... All future actions taken with respect to Righthaven require my approval, as I am the only person with the authority to make decisions on Righthaven's behalf unless and until my receivership is terminated.

Finally, in the filing with the court, Pearson notes that this action indicates that Gibson has been hiding certain Righthave funds/assets:

Instead of satisfying Righthaven's substantial judgments, Gibson has elected to allocate Righthaven funds that have been concealed from me to pursue appeals over rights that Righthaven no longer owns, and has done so in a manner that further imperils what is left of Righthaven's assets with additional attorneys' fees awards and sanctions.

Reader Comments

Well, if according to the US Supreme Court, corporations are people, then they can also die. It also follows that once dead, they can become undead - thus bringing about the zombie apocalypse without any people actually having to die!

Re: Re: Here's a clue . . .

You know, if I was as foolish to go through what the Gibsons went through, and then got the boot from Righthaven, I would have considered it a relief. I mean, who would really want the hassle of being the one who has to dismantle a business that is essentially assets-on-the-hoof? The mind boggles.

Re:

If the receiver considered him fired as of the date she was appointed receiver, she probably should have told him that. Apparently he had no idea that he wasn't CEO. That's the kind of information you usually give someone directly, rather than just assume they know it. Not sure what she was thinking there. It's a shame too that Randazza and the receiver are so anxious to kill this appeal. The brief (starting on page 42 of the document embedded in the article) nails it. The court can't find it lacks subject matter jurisdiction and then render a judgment on the merits. You can't have it both ways. Regardless, the fair use analysis done by the court was very, very sloppy.

Re: Re: Re:

Having a receiver appointed does not mean that all officers lose their jobs. So, no, I don't get your point. Don't you think it's kind of weird that she just assumed that the CEO would know he no longer had a job? Seems like the kind of thing you discuss rather than assume.

If you were ever intent on providing the Bar with evidence of your lack of character and unworthiness to be a member of that association, it seems Gibson just can't stop with things are they were. I can't help but think when the the Bar considers this new data with the old, it will be a slam dunk case to eliminate his license to practice law.

Re:

This entire thing makes no sense.

Your company has been dismantled b/c it was out of cash with substantial debt, you've been fired, you lost majorly in multiple court killing your entire business model, your companies name is synonymous with "stupid" and "incompetent" lawyers, the state bar has turned against you... and you want to fight for it now?

I just don't understand what he was thinking when he hired this new law firm and filed an appeal? Did he think no one would notice? What about the funds he is using to pay for this that should be going to the debts owed? It boggles the mind.